NEW YORK (CNN/Money) - Dell Computer Thursday reported fourth-quarter earnings and sales that met Wall Street forecasts, and the No. 2 personal computer maker said it would meet first-quarter estimates as well.

The Round Rock, Texas-based PC maker reported net income of $603 million, or 23 cents a share, up 32 percent from net income of $456 million, or 17 cents, a year earlier. Sales came in at $9.7 billion, a 21 percent increase from $8.1 billion a year ago. The results were in line with average forecasts by analysts who follow the company, according to First Call.

Dell also said that for its fiscal first quarter, which ends in April, earnings should come in at 23 cents a share, compared with 17 cents a year ago, and that it expects $9.5 billion in sales, up from $8.1 billion in the same period last year. These targets are in line with Wall Street's current consensus estimates.

Dell has fared much better than many other technology companies during the past year, despite weak overall demand, due to market share gains, new product offerings, and a tight rein on costs. Dell CFO James Schneider said during a conference call with the media it has not seen any major change in demand during the recent quarter, but that it should continue to gain share.

"Soft demand is not an excuse for poor results," said Schneider during that conference call. Schneider and Dell CEO Michael Dell added they were not hearing customers mention Iraq or other geopolitical issues as a reason for cutting back on spending.

So, it appears concerns about Dell issuing a first-quarter earnings warning were all for naught. The company said it expected unit volume in the first quarter to increase at a rate of 25 percent, much higher than the estimates for growth in the low single digits for the personal computer industry. This news was greeted with cheers by Wall Street.

"This further reinforces our confidence that Dell can continue to deliver double-digit growth in a flat-to-modestly up environment for PCs," said Graham Tanaka, manager of the Tanaka Growth fund, which owns shares of Dell.

There had been concerns Dell's results would be hurt by a PC price war with rival Hewlett-Packard, which is the largest manufacturer of PCs. But Kevin Rollins, Dell's president and COO said during a later conference call with analysts the company is continuing to lower costs fast enough to keep margins improving. Dell's operating margins were 8.4 percent in the fourth quarter, up from 7.4 percent a year ago.

In addition, Dell reported strong levels of growth in its server and storage businesses, two areas analysts see as key to Dell's future success since they have higher profit margins than the notoriously cutthroat PC business.

"Going forward, Dell is going to be less PC-centric and more focused on end to end technology hardware appliances," said Brent Bracelin, an analyst with Pacific Crest Securities. "Dell will displace Hewlett-Packard and IBM over the next five years as the No. 1 tech supplier to enterprises."

Bracelin does not own shares of Dell and Pacific Crest has no investment banking relationship with the company.

The company also reported that its cash position, including short-term investments, increased to $4.6 billion, from $4.3 billion at the end of November. But, Michael Dell and Schneider said the company has no plans to pay a dividend until there is more clarity about possible changes to the ways dividends are taxed.

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President Bush has proposed the elimination of the tax that shareholders pay on dividends as part of his economic stimulus plan. This has met with criticism from some members of Congress. Nonetheless, two other large tech companies, Microsoft and Qualcomm, have announced they will begin paying a dividend in March.

Shares of Dell (DELL: Research, Estimates) rose nearly 6 percent in early morning trading on Friday. Valuation, however, is a concern for some investors, even though it's not nearly as expensive as it used to be. Dell trades at about 23.5 times earnings estimates for the current fiscal year (ending in Jan. 2004).

"Dell is not the cheapest stock in the world," says Ted Parrish, co-manager of the Henssler Equity fund. He owns the stock, but says he is not looking to add to his position at these levels.